Economics of Theatres
‘Theatre as an art is dying .People don’t come to theatres to watch a play and the amount of
audience is decreasing.’
This is been the most concerning question since ages.
I took 2 years to analyse this on my level and the problems that people tried to point out were
actually the consequences or effects of the problems . The problems were more of economical
in nature than being artistic.
A theatre cost is a fixed cost i.e., it won’t get affected due to audience count, but it becomes
slabbed after a point. Theatres in India charge according to the ticket rates and not on the
number of tickets. The rent for a play with a highest ticket rate of ₹300 is three times more than
that of a play with a ticket rate of ₹200. So the theatre shares deemed profit but don’t share
actual loss.
Finally, what made theatres to charge so high? The reason is the basic concept of economics.
Lesser the demand, higher the price. The cost of maintaining a theatre is very high - the cost of
electricity alone is in lakhs. The theatre workers are paid for a month but can be used only for
the number of planned shows, so there’s a lot of disguised unemployment involved and theatres
try to recover the cost of month (i.e., 30 days x 4 shows) in some shows which don’t works out.
This leads to maintaining problems and theatres turn bad. Then, the audience thinks, “Why to
buy a ticket of ₹350 and experience people talking on stage sitting on a dull chair? I'd rather go
to a multiplex and watch a movie on a grand screen and experience it in 3D with all the visual
effects and special effects making it a larger than life experience.”
Even if there is no audience and no box office collection, the producer still has to pay the
writer, the director, all the actors, crew members, and technicians .
Advertisements are crucial for a play as a play is performed at one place only by a team due to
its limitations, unlike a film. Advertisements tell audience when and where the play is going to be
performed. Here, daily newspapers are used extensively by the audiences in deciding where
and which play to watch. Lately these newspapers are facing monopoly and consequently they
charge very high prices for a small space.
All of this buzz affects per show cost of a show of a play which leads to charging high prices
per audience.
There are more reasons but all of them are similar and all of them contribute in raising the bar
in this cycle of raising risk.
What I analysed was, these all are fixed costs and costs like theatre rent and
advertisements weren’t affected by the box office collections. Again, a very basic principle -
variable costs aren’t risky or leveraged, fixed costs are, and when fixed cost constitutes more
than 70%, projects are bound to be risky and most probable to get a bad patch.
On my immature level, I found two solutions.
Sign a petition asking theatres to change the system of charging and if they want a share in
profits, contribute to the loss as well which is lame, so they will prefer setting up a flat rate for all
the shows.
Decide crews and actors payment in percentage or minimum pay whichever is higher.
Use social networking and media apps to tell the schedule and share the newspaper spaces .
Turn fixed costs into variable costs and semi variable costs.
Disguised unemployment exists, but it is hard to find no matter what field one is concerned
with. It drags down an enterprise and ultimately does harm to the economy without people
realising why. Hopefully people will start recognising it, and working on finding solutions for it.
-Abhishek M.
audience is decreasing.’
This is been the most concerning question since ages.
I took 2 years to analyse this on my level and the problems that people tried to point out were
actually the consequences or effects of the problems . The problems were more of economical
in nature than being artistic.
A theatre cost is a fixed cost i.e., it won’t get affected due to audience count, but it becomes
slabbed after a point. Theatres in India charge according to the ticket rates and not on the
number of tickets. The rent for a play with a highest ticket rate of ₹300 is three times more than
that of a play with a ticket rate of ₹200. So the theatre shares deemed profit but don’t share
actual loss.
Finally, what made theatres to charge so high? The reason is the basic concept of economics.
Lesser the demand, higher the price. The cost of maintaining a theatre is very high - the cost of
electricity alone is in lakhs. The theatre workers are paid for a month but can be used only for
the number of planned shows, so there’s a lot of disguised unemployment involved and theatres
try to recover the cost of month (i.e., 30 days x 4 shows) in some shows which don’t works out.
This leads to maintaining problems and theatres turn bad. Then, the audience thinks, “Why to
buy a ticket of ₹350 and experience people talking on stage sitting on a dull chair? I'd rather go
to a multiplex and watch a movie on a grand screen and experience it in 3D with all the visual
effects and special effects making it a larger than life experience.”
Even if there is no audience and no box office collection, the producer still has to pay the
writer, the director, all the actors, crew members, and technicians .
Advertisements are crucial for a play as a play is performed at one place only by a team due to
its limitations, unlike a film. Advertisements tell audience when and where the play is going to be
performed. Here, daily newspapers are used extensively by the audiences in deciding where
and which play to watch. Lately these newspapers are facing monopoly and consequently they
charge very high prices for a small space.
All of this buzz affects per show cost of a show of a play which leads to charging high prices
per audience.
There are more reasons but all of them are similar and all of them contribute in raising the bar
in this cycle of raising risk.
What I analysed was, these all are fixed costs and costs like theatre rent and
advertisements weren’t affected by the box office collections. Again, a very basic principle -
variable costs aren’t risky or leveraged, fixed costs are, and when fixed cost constitutes more
than 70%, projects are bound to be risky and most probable to get a bad patch.
On my immature level, I found two solutions.
Sign a petition asking theatres to change the system of charging and if they want a share in
profits, contribute to the loss as well which is lame, so they will prefer setting up a flat rate for all
the shows.
Decide crews and actors payment in percentage or minimum pay whichever is higher.
Use social networking and media apps to tell the schedule and share the newspaper spaces .
Turn fixed costs into variable costs and semi variable costs.
Disguised unemployment exists, but it is hard to find no matter what field one is concerned
with. It drags down an enterprise and ultimately does harm to the economy without people
realising why. Hopefully people will start recognising it, and working on finding solutions for it.
-Abhishek M.
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